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we live in one america with to economies. i am christine romans. this is your money. the stock market is litting highs, corporate profits are soaring and not everyone is feeling it. as the dow moved higher, america's middle class is stuck. you should be rolling in stock market riches. instead, many of you are missing out. only 52% of ruin vested in stocks. that's down from 65% in 2007. meanwhile, corporate profits are soaring, up 94% as a share of the economy in the last decade. wages are stagnant. america's companies are so hungry for talent they're importing it from abroad. meanwhile, you can't pay for the college degree you need just to compete. i want to bring in terry savage, steven moore and naomi prin. steve sen a senior economic writer and conservative commentator and noem i a senior
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fellow at demos is. she is also the author of it takes a pillage, an epic tale of power, deceit and untold trillions. terri, let me start with you, the stock market is disconnected, the s&p 500 up 120% since the lows of 2009 and a new forecast guidance this week says it is not done yet. they say the s&p could go to 1900 by the end of the year. it would be a gain of around 17%. half of americans aren't invested. they're missing out. what needs to change for more americans to get in? >> well, you know, let's not blame the stock market or complain about it. it certainly feels a lot better than in march of 2009 when the dow was 6700. the real thing is the fed is extraordinarily successful at creating a lot of money. it helps the government refinance its deficit at low
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interest rates and since interest on the national debt, the third largest category of spending after defense and social spending, the government thinks it is great to have low interest rates. the fed can't do everything and we're seeing proof of that. there is a lot of money in the economy and yet businesses are so worried about what will happen with taxes and insurance and consumers are so worried about jobs they're not going out and even buying houses with low mortgage rates, so the money has to go somewhere, and it has been going right into the stock market. that's why you see the market soaring. when the economy and jobs struggling to grow but certainly not keeping up with what's going on and the market it is a function of a lot of money looking for a home and the stock market is it. >> a lot of money. naomi, a rise in the stock market use to mean a rise in the economy. the economy is struggling to grow at barely 2.5%. why the disect? disconnect. >> first of all the money that goes into the stock market terri was talking about is cheap money
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funneled through institutions, banks, corporations, hedge funds, mutual funds that can take money almost at 0% and funnel it to a place where it can push the market up. that's it. the percentage of u.s. gdp personal wages make up are all time lows. there is no available money for individuals to make ends meet in their homes and in their lives let alone push into a stock market that is being bolstered by policies and cheap money. >> talking about cheap money, steven, the fed pumped $85 billion into the economy every single month. 85 billion. driving the recovery in the stock market, the housing market, haven't seen the same recovery in jobs. won't the slow jobs recovery ultimately be bad news for housing and stocks? >> well, look, first of all,
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make the case when you have dollar 15,000, unqualified great news for the economy, the argument is made only half americans have a little money in the stock market and only half of americans are benefitting and what i would say about that, christine, which is really the crux of the issue is what we need to do as we move forward in this 21st century is get -- is become much more of an investor,/owner society so every american can benefit from the wealth gains that are engendered by a rising stock market and it means we should have more expand the 401(k) plans, make it a lot easier for people to invest in the market as a way to get rich. i have talked for many years on this show and others why not finally allow young and lower income americans to take some of their social security money and put it into personal account where they can actually invest in the market. those kinds of things would actually reduce the income inequality in the country we're
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worried about. >> and something the bush administration touted for a long time and the market fell apart and people said isn't it a good thing you don't have a lot of people with money in the stock market. >> you can't have it both ways. you can't say on the one hand if the market goes up. >> i know. >> so, look, over the long run this is an important point, christine. over the long run, especially for young people, where do you want to put your money? in the stock market. the long-term return is 8%. >> here is the issue. you and i, all of us here have been talking about the long-term benefits of stock market investing for years. we report this week shows a record low percentage of the american people who are invested in the stock market. how do you change that behavior? >> you change that behavior through education and we're woefully under educated despite steven's efforts at the journal and mine through my columns over the years. the fact is according to the market historians there has never been a 0 year period going back to 1926 when you would have lost money in a day verse fined
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portfolio of large company stocks with dividends reinvested even adjusted for inflation, so one of the things we have to do is absolutely correct is first of all not blame the stock market for dividing us but encourage investment in the stock market and also encourage washington to create policies that promote the kind of economic growth that sends that money into business building, new factories, employing more people. if you don't have certainty about what the tax situation is going to be or what hiring three more people will do to your health care bills if you are an employer, them you can't expand. that's cheer the stock market on and encourage people to invest more and encourage both parties in washington to stop brinksmanship running up against the policy that is create growth because growth gets us out of those problems. >> nomi will be first after the
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break. you want a job in this economy? you need i agra degree you can' afford next. say, well, go away. shoo bear. but we can't really tell bears what to do. moooooommmmmm!!! then one day, it was just gone. mom! [announcer] you are how you sleep. tempur-pedic.
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if you want a good job in this economy you need a college degree. the workforce has shifted over the years. the share of workers with a college degree exceeds the workers with a grej degree or less. student loan debt is on the rise as well. the average amount $26,600. i want to bring back nomi prins and steven moore and terri
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savage. young people are getting a double whammy, stagnant wages and crushing debt. i am very worried instead of people managing money going forward and planning for retirement they will be managing debt and not even really getting that first step into the workplace. how serious is this? >> it is very serious. the student loan situation as we know is diabolical. as you just mentioned in terms of statistics, people can't even find jobs to pay off their debt right now and it is only going to increase and get worse in the future. you go back to a situation where even people that can save have accounts in banks at 0% interest and nothing there to accumulate and everyone else is talking about maybe we should get into the stock market and have that be a way to help increase people's disposable income but if you have no income to begin with and all the of your income is going to debt when you sdoo receive it, there is nothing left over to save let alone to risk what you should not do in a
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market environment. you risk money you have. you don't risk money you don't have. when you don't have a lot coming in and saddled with debt, it is a precarious situation, not just for students but the overall stability of our american economy. >> new research shows that spending is on the rise. american households now spend about 9% more than they did in 2009, steven, two major segments of america, the young and the old are getting pinched yet consumers are spending more. can that last? >> well, you know, i am going to correct you on something, christine. >> you do it. >> i have always believed -- >> and then i will correct you back. >> you can do that. i have always believed it is a fairy tale what drives the economy in the long-term is consumer spending. i don't believe that to be -- it is true in the short-term, christine, when consumers go out to the shopping center and spend money that increases business, but in the long terrible what
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increases the economy is when businesses invest and this is exactly what you were talking about. >> i will agree with you on that. i go a little crazy when we hear we have to get consumer spending and i say that's what got us in >> clarified that point. here is the problem with the u.s. economy. first of all, i have no disagreement that this is a terrible economy for low income people. it is amazing the very people most likely to vote for barack obama have been the people that have been most victimized by his policies, but i will say this. if we want to see more growth in the economy and by the way, higher wage jobs in the future, that is directly related to business spending, and the one thing we're not really seeing enough of, the things that lead to future growth, equipment, computers, and i do think that's partly responsible. if you want more investment you don't raise taxes on investment which is what we did in january and i say this almost every week on this show.
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i have to say it again. i do think obama care is having a very negative effect on the willingness of businesses to expand right now. >> i will ask terri to weigh in on that. do you think that you have talked about new regulations. you talked about concerns about what tax rates are going to be. do you think the president's health care plan is holding back businesses and holding back all businesses, terri? >> yes, i know it is for a fact. i sat at a luncheon table a few days ago and heard people i didn't know what business they were in talking about whether they could make some people part-time or whether they would hire additional people or whether they would go over the limit and the rising cost of health care to small businesses. look, what's going on in washington is hurting the wrong people. it is hurting people, seniors who saved, the feds pushing down rates and retirees can't live on their income. it is insane the government gets to borrow at a quarter of percent thanks to the fed and we make students pay 6.8% interest to repay their loans, and it is
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as steven said, it is insane that we penalize growth and capital investment and hiring of people. what we really want to do is encourage more hiring, more investment, and we have a lot of distortions in washington. both sides of the aisle need to understand this to move us forward. >> come back again. so many things to talk about. so many things to talk about. nice to see all of you this weekend. up next, charles ramsey became an internet sensation this week after he played a key role in the rescue of three missing cleveland women. why what he was eating for dinner matters next. humans. we are beautifully imperfect creatures living in an imperfect world. that's why liberty mutual insurance has your back, offering exclusive products like optional better car replacement, where if your car is totaled, we give you the money to buy one a model year newer.
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you have been watching the heart wrenching story in cleveland unfold all week, three missing women found alive after a decade of captivity. when the nation is hooked on a story, corporate america is
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never far behind. this is charles ramsey. he is a neighbor that helped rescue the women and in interviews after the incident, even in the 911 call to police he was very specific about what he was eating before running outside to help. >> here i come with my half eaten big mac, and i look, and i say, what's up and she is like i have been trapped in here. he won't let me out, me and my baby and i said we ain't going to talk no more, come on. >> a big mac. he also mentioned mcdonald's several times and after videos went viral on the web, the company sent out this tweet saying it would be in touch with charles ramsey, some call it news jacking. some say it is pr genius and others think it is harmful to a brand's credibility. it is when companies jump into a breaking news story either for press coverage to improve its public image or boost sales or just to acknowledge that it is their name and product that has been mentioned. we spoke with mcdonald's waiting
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to contact mr. ramsey out of respect for the victims and their families. this he received thousands of tweets following the comments and the company felt it had to respond. it strongly insists it is not taking advantage of the situation. some pr experts have their doubts. rachel sklar is a media writer and founder of change the ratio. in the days following and charles ramsey's rise to internet fame, his criminal record then came to light, specifically jail time he served for domestic violence. he pleaded guilty. spent eight years in prison. he was released. he has since cleaned up his act. regardless of his past, he helped save three women from ten years of hell. >> they aren't attaching them to charles ramsey as a spokesperson for mcdonald's. it is responding to the mention of mcdonald's over and over again in the story. it was part of the story obviously not a big pivotal role but mentioned enough that i
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think it would have been odd for mcdonald's not to acknowledge it. i think it would be appropriate for mcdonald's to do something charitable, something nice for charles ramsey, nice for the neighborhood and probably appropriate for mcdonald's to take the lead and demonstrate corporate responsibility by donating a chunk of money by ending domestic violence. >> look at a couple other example from february, companies wading into the news cycle. during the blackout at the super bowl oreo tweeted this ad, you can still dunk in the dark. about a week later florida senator marco rubio said that now infamous sip of water, remember, that was in the middle of the televised response to president obama's state of the union, this is what poland springs did, possessioned this pic with reflecting on our cameo, what a night. rachel, are they in some way more effective than traditional advertising because they don't seem to canned? i find it interesting big companies trying to figure out how to use social media. usually social media is about
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dising companies and not letting them get their own message or pitch into the mainstream conversation. >> social media is all about social platforms and very smart, canny, advertisers who are able to be nimble and react in realtime can use the platforms to get their message across. oreo is a fantastic example, just so nimble, so quick, and really just won the super bowl with that tweet, the dunk in the dark photo. poland springs, they would have been ridiculously dumb not to capitalize on that sip. they could have been more clever about their tag line, but sometimes you just have to do what you can do in the moment. >> sometimes you do something and it is not what you should do. i mean, let's talk about kenneth cole tweet during the political uprising in egypt that read millions in up roar in cairo, rumor is they heard the spring collection is available online. wow. they really got slammed for that. and later issued an apology after an up roar from twitter
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users. what can companies learn from mistakes like this? >> i think that just learn not to be tacky, i think, that this is a judgment thing. have smart, experienced people with proven judgment who are are manning the hair trigger of social media. the worst is if you have an inexperienced intern or junior person who thinks that it is their job to be funny or snarky and then tweet something out that crosses the line of respectability and good judgment. i think to always react with on the side of decency and respect and compassion for victims or oppressed people, this sounds really basic, but it is amazing how kenneth cole just totally missed it, a luxury goods dealer, you know, surfing on the back of the arab spring upris g uprising. it didn't look good. it was terrible judgment. >> they are still wading into the social media space trying to
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figure out how to use it. remember, it is always they would pay for what they want to say about their company and this social media is the conversation, so they're having a hard time, a slow tentative hard time figuring it out. really nice to see you today. thank you. >> likewise, thank you. >> new highs on the dow this week. we'll show you how to make the most of this bull market right now. we'd always have to go everywhere with it. get in the front. we drive. it was so embarrasing that we just wanted to say, well, go away. shoo bear. but we can't really tell bears what to do. moooooommmmmm!!! then one day, it was just gone. mom! [announcer] you are how you sleep. tempur-pedic.
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say about their company and this most of this bull market right
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try e-mail marketing from constantcontact. it's the fastest, easiest way to create great-looking custom e-mails that bring customers through your door. sign up for your free trial today at constantcontact.com/try. it is a red hot stock market and for the first time ever the dow closed above 15,000 this week. if you're already in the market, is it time to cash out?
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if you're not, is it too late to get in? record highs for the stock market but investors are weary. >> investors are, yes, excited they're making money and really anxious. they understand that this has an element of artificialitie. >> if that's what the pros are saying imagine how individual retailers feel and what about almost half the americans too scared to invest in stocks? americans have few other choices out there to help build wealth and save for retirement. in today's low interest rate environment the return on bonds and interest-bearing accounts are negligible. >> a lot of individual investors still on the sidelines. they have been waiting to get in. what are you waiting for? we're hitting all time highs. >> they're afraid they have seen a bull market more than four years old and don't want to be the sucker at the bottom. >> they afraid at the bottom. they're afraid at the top. you have to get in now.
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>> get in how? one answer, look for value in companies that may be lagging behind in the recent bull market run. >> the way we have seen some of the industrial names lag really to me is a buying opportunity. i think we will have economic growth and these more sensitive companies have plenty of opportunities to get stronger and the stocks to move higher. >> price to earnings ratios, the stock price to projected profits. at an average of 19 times earnings, today's stocks look cheaper than past rallies, back when ratios reached into the 20s and 30s during the tech bubble of the 1990s. that suggests today's rally has room to grow. stocks have already gained 15% this year alone and it is only may. shouldn't you cash in now while you're ahead? >> it is perfectly good to be happy and take a little profit off the table and keep the positions and the commitment. >> thanks for joining this
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conversation on "your money" this week. you can find me on facebook and twitter, coming up next on the next list, the man that starts a solar revolution and now captain sunshine is on a mission to bring solar power to the third world. that's up ahead. it is the manifestation of our dream. >> solar evolution starts here. come on in.

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Your Money
CNN May 11, 2013 11:00am-11:31am PDT

News/Business. A break down the financial news of the week.

TOPIC FREQUENCY Charles Ramsey 6, America 5, Christine 4, Washington 3, Us 3, Mac 2, Cleveland 2, U.s. 2, S&p 2, Tempur-pedic 2, Moooooommmmmm 2, Steven Moore 2, Steven 2, Kenneth Cole 2, Fixodent 1, Florida 1, Possessioned 1, Nomi 1, Agra 1, Let Me 1
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